A few days ago I mentioned the Harvard Book Store, which features an Espresso Book Machine which it uses to help it stay relevant in its market, and pondered why it is that more stores aren’t following its example. As it turns out, Alan Beatts has a definitive answer to that on the blog of his San Francisco bookstore Borderlands Books.

Beatts ran the numbers for the cost of the machine, materials, and operations, versus how long it would take to pay down those costs at various rates. He determined that if he averaged one book an hour over the 8 hours per day, 362 days per year that the bookstore is open, it would take 11 years and 9 months. If it averaged 3 an hour, it would take 3 years and 11 months.

Beatts suspected that the actual rate of use for the machine in Borderlands would be somewhere between those two extremes, meaning that the $100,000 spent on the machine would likely be in limbo (and he’d be paying interest on the loan) for the better part of a decade. Of course, if advances in technology cut the price, it might start to look like a more reasonable investment.

Problem is that I don’t think that’s going to happen since the actual physical technology used in machines of that type is really quite mature — in essence it’s laser-printing combined with basic 20th century robotics. The thing about mature tech is that the price doesn’t tend to change much unless the market for the specific implementation of the technology increases significantly (in that case, economies of scale kick in and the price drops). I don’t foresee the market for "book machines" increasing much, especially in the face of increasing adoption of ebooks. Gadgets like the Espresso Book Machine are probably going to remain where they are now: out of the reach of most bookstores.

With that in mind, it’s not so surprising that most places that have bought them so far have been university libraries—they’re about the only ones who can afford that kind of outlay. (The librarian I spoke to about MU’s Espresso said that the university had viewed it as a capital investment as they would any other expensive facility or machinery.) Will the machine become cheaper? It hasn’t yet, and if Beatts is right it probably won’t soon.

Comments:

Well, sometimes economies of scale can be forced. The best example are gaming consoles that are (sometimes) sold at a loss at launch to build up an installed base and a game catalog, which then draws new sales and manufacturing scale then makes the price profitable.
Of course, that assumes the manufacturer can actually build the things at the higher rate and has the funding to sustain the losses long enough to reach breakeven. The Sony PS3, for example, took three years and billions in losses to reach breakeven. But that was in the face of two competing platforms eating away their potential customers.
One can probably assume the espresso people have run the usual trade studies and are selling the device at a price that optimizes their manufacturing capability and working capital and the current price is the best they can do given its market potential. (That is, even if every indie B&M bookstore in the country bought one, the price would not be significantly lower.)
I took a fair amount of flack last year for suggesting POD was a tech that might simply have reached the market too late to be viable as anything more than a niche specialty. So far, I have yet to see anything that suggests the technology will be any kind of game changer or life-preserver for small pbook retailers.
It’s current adoption looks to be its upper limit; big university libraries and the like.
At most, the bigger chains (B&N, BAM, HPB) *might* have a use for it in regional feeders if they changed their business model to the old B.Dalton approach or got serious about online ship-to-store.
Which, so far, is not looking likely.
What we’re seeing is most likely what we’ll get.

Espresso presents a completely transitioned print production and will sustain itself long after retail book revenue has re-balanced itself. Currently the retail revenue is more evenly divided between print books and non-book retail products with ebook revenue inconsequential. In the long run POD has already proven a track for conventional book production and digital distribution trend to point of purchase will sustain on-site retail installation.

Screen reading advocates always look for price reduction, without regard for cost reduction. Espresso can double in price and yet be costed out to retail advantage.

The Expresso also takes an impressive amount of floor space when you add in the paper storage.

To print the amount of books this article mentioned, per day, requires lots and lots of paper.

Since bookstores’ primary financial problem is the low profit from books to the high cost of rental space, the space taken up by the Expresso and its supplies would hurt the bottom line as much as the cost of renting/buying it.

The price is dictated by the numbers being sold so it’s inevitable that it is high. This is a technology that is a few years ahead of it’s market, but I am absolutely certain it will come of age in the next 5 years. There is no point in EBM offering it at a loss because the market simply is not ready for it yet.

Much as I dislike the idea, paper is going to have a long tail. Prices are going to increase steadily because print runs will shrink and sales will slide. The only economic way of delivering affordable paper books will be POD.

I believe that EBM are using this time to continue development and being patient by while the market transitions. As the market tightened and the paper side of the market really starts to wrinkle, retailers will start to focus on POD and that is the time EBM need to ramp up production and cut the price.

I’m baffled why so many are enamoured with the Espresso machine. It’s the flying car of the book technology world, intriguing in theory, hopelessly expensive in practise and not solving any realworld problems.

Geography is perhaps one of the few situations where an Expresso machine makes sense. Imagine a distant country (particularly an island) with a population small enough that regular print on demand isn’t viable. Printing on a Expresso might make sense there, particularly if it’s done not at a bookstore but inside the wholesale distribution system. In that situation customers are saving the cost and time to ship in a book from overseas. They’d get the book in a day or two at the retail price, not a week or more later with a hefty air-shipping fee.

Unfortunately, I don’t get the impression that those marketing Expresso machines are thinking along those lines. They’re going for libraries and an occasional trendy bookstore.

Michael – that is because Libraries are the ones with capital I guess. But it is early days as yet.

Willem – If we extrapolate into the future by 5 or 8 years, or 15 years. What then ? pBook sales down to a third of what it is now ? less ? Drastic reductions in print runs for a massive portion of pBooks other than best sellers ? Large swathes of titles that just don’t justify print runs at all ? Who exactly is going to pay for their transportation, storage and distribution as eBooks find a home in the 4 – 8 dollar range ? Can pBooks stay at 14 dollars ? Can they stay under 20 dollars ? Can many of them even be bought ? I suggest not.

Even if you vary the timescale I set out above.

If you believe that pBooks will have this long tail, not just 5 years down the line but 15 or 20 years down the line then surely the only distribution method, for any other than best sellers, that makes economic sense is POD.

Of course you may say that it will be people like Amazon that will be using POD and no one else. That makes some sense. They print only to Order and post them to you. I can see it.

But I don’t see it to the exclusion of all other competitors. I can still see a significant market of pBook customers willing to walk in to bricks and mortar bookstores in their own cities across the world to buy POD titles when machines like the espresso drop to the far more affordable prices that are inevitable.